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Home News Managing Debt
April 5, 2024
While being in debt is never ideal, some types of debt are better than others, and debt is sometimes broken up into “good debt” and “bad debt.”
“Good Debt” is debt that is an investment back into yourself or that increases the value of what you own. That could include student debt, a mortgage, or other investments.
“Bad Debt” is when you borrow for something that you’re losing money on. This could include things like credit card purchases for clothes or food and payday loans. Because of how quick cars lose value, auto loans often walk the line between “good” and “bad” debt.
That being said, even if your debt is technically “good,” that doesn’t mean it won’t still end up hurting you if you become unable to make your payments.
There are strategies to help you get back in control if you find yourself overwhelmed with debt payments (and even if you’re not overwhelmed, per say, these will still help you pay off your debt faster).
Beyond the major strategies, there are other adjustments that you can make to your approach to debt and daily spending habits that make a large impact when it comes to paying down debt.
Late and Missed debt payments are bad for your credit score. Your credit score determines how much you can be trusted to borrow, and it affects “good” and “bad” debt. Forgetting to pay your credit card on time might eventually prevent you from getting a home or car loan.
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